Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The UK economy grew at the same pace as previously estimated, data from the Office of National Statistics showed Thursday, as the Bank of England cautioned over rising levels of inflation.
On an annual basis, UK gross domestic product expanded an unrevised 8.7% in the first quarter, picking up pace from 6.6% growth in the final quarter of 2021.
On a quarterly basis, the UK economy grew an unrevised 0.8% in the first quarter, slowing from a 1.3% expansion in the fourth quarter.
‘Our latest estimate for economic growth in the first quarter is unrevised as a whole, showing the UK economy continued to recover from the pandemic,’ said ONS Director of Economic Statistics Darren Morgan.
The rapid tightening in monetary policy to combat inflation has prompted fears that the UK economy could fall into recession - two consecutive quarters of negative growth.
Soaring inflation will hit Britain harder than any other major economy during the current energy crisis, the Bank of England has warned.
Governor Andrew Bailey on Wednesday said the UK economy would likely weaken earlier and be more intense than others as a result of the energy price shock that all European economies face.
The situation was further exacerbated in Britain by the ‘structural legacy’ left by Covid in the labour market as companies struggled with a lack of workers.
‘Unfortunately, there is going to be a further step-up in UK inflation later this year because that's a product of the way the energy price cap interacts with the energy prices we have observed over the last few months,’ Bailey told a European Central Bank conference in Sintra, Portugal on Wednesday. ‘I think the UK economy is probably weakening rather earlier and somewhat more than others.’
Still, market participants widely expect the BoE to raise rates by half a percentage point at its next meeting in August - a move which Bailey did not completely rule out on Wednesday, saying there were ‘options on the table’.
Copyright 2022 Alliance News Limited. All Rights Reserved.